Appraisal News and Business Tips

Posts Tagged FHA

Newz 2-25-16-True cost of low fees, FHA appraisals, Worst street names, Appraisers with guns

20 worst street names

Excerpt:

I’m sure the folks on Cannibal Road are lovely people, I just won’t be attending any of their dinner parties. These are the streets that you don’t want to find yourself driving down – trust us, no good can come from a stroll on Buckets of Blood Street. Proceed with caution..

http://heavy.com/comedy/2012/12/the-20-worst-street-names/

Thanks (again) to Jonathan Miller for this great link!!

What are the strangest street names you have seen?

POST YOUR STRANGE STREET NAMES BELOW AND READ OTHER COMMENTS!!

My comment: Yes, there is an O’Rourke Street in a nearby city!!

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How many appraisers are doing FHA appraisals now?

From www.appraisalport.com

My comment: I suspected that most appraisers will do them even with all the additional work required. Only 13% have given up FHA appraisals.

Read more!!

Newz: 2-18-16 No amcs – Banks fined – College degree

Toronto’s Half House

Willy Wonka would love this weird half-a-home

Excerpts:

No, this isn’t a trick of Photoshop. Nor is it the world’s nastiest spite house; rather, this bonafide half-home shares more with its nail house brethren after witnessing a history of blight and zoning changes.

The lone row home at 54 1/2 Saint Patrick Street dates back to Toronto’s slums in the late 19th century. Built somewhere between 1890 and 1893, this bay-and-gable relic from a bygone era once was a one of six identical, structurally intertwined homes on what was then known as Dummer Street

This begs the question: how does half a building cleave away so cleanly only to leave the rest of it standing?

Read more at: Be sure to click on photo full screen to see it better

http://www.atlasobscura.com/places/toronto-s-half-house

 More photos and info atClick here Link was too long to post…

Read more!!

Newz// 2-11-16 – Quicken Rocket Mortgage Super Bowl Ad-Tweet O Mania-Price per sq.ft.

Jonathan Miller’s Feb. 5 great comments on Miller-Samuel Housing NotesA few of the topics:

Repo Man Flipping Out In Housing’s Waves – 1 hour and 46 minutes recording of a Bloomberg interview with Miller. Appraisal related discussion starts at about 1 hour, 6 minutes.

Deja Vu All Over Again? Big meeting with lenders and borrowers. Credit issues, deceived borrowers, etc. Miller was the moderator.

Flint Water Crisis – includes Sacramento CA appraiser Ryan Lundquists blog interview with a Flint real estate agents – lenders don’t want to lend

My comment: I can’t wait to see what Miller says about the Superbowl ads!!

Check it out at:

http://www.millersamuel.com/note/february-5-2016/?goal=0_69c077008e-4f154d8430-111272681

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New Trouble Knocks Flint as Mortgage Firms Require Proof of Safe Water

Lenders say they won’t give mortgages unless buyers offer proof of safe water

Excerpt:

The severity of the Flint, Michigan, water crisis continues to plague residents, who now have to deal with the possibility that buyers won’t be able to secure home loans in the area, an article in The Wall Street Journal by Joe Light said.

http://www.housingwire.com/articles/36212-flint-water-crisis-now-impacts-mortgage-lending

My comment: I am hearing from appraisers that some lenders want proof of safe water in other places. More Scope Creep. Can’t tell by looking at it. Has to be tested.

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FHA water quality notices

Thanks to James Shoe for these links!!

 

FHA with a notice about concerns they have for water contamination, especially in Genesse County (Flint Michigan).  They provided a link to their Knowledge Base FAQ http://portal.hud.gov/hudportal/HUD?src=/FHAFAQ

 

The article specifically addressing Flint is found at http://hudgov.prod.parature.com/link/portal/57345/57355/Article/8684/Does-FHA-have-any-policies-requiring-water-testing-in-Flint-Michigan-and-its-surrounding-areas

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3 ways price per sq ft is valuable in real estate (even for appraisers) From Ryan Lundquist’s blog. He writes for real estate agents, but some of his posts apply to appraisers also.

Excerpts:

My name is Ryan and I use price per sq ft in real estate. There it is. My confession. Are you surprised? I know you’ve heard me talk about how price per sq ft is one of the most abused metrics out there. I still believe that. Yet there are several ways price per sq ft is actually valuable and useful for real estate professionals (even appraisers). So let’s kick around some ideas together below.

1)  Price Per Sq Ft Helps Us See the Entire Market: What have buyers been willing to pay in a neighborhood? It’s valuable to see the price per sq ft spectrum to help answer this question. What is the high, the low, and the average? I ran a CMA of sales over the past 90 days in the Mather neighborhood in Sacramento County (a tract subdivision), and the price per sq ft range is $112 to $206

Appraiser application: Sometimes appraisers mock price per sq ft and treat it like a meaningless metric, but there is actually some real value in using it. Not only can we get a more detailed sense of the market, but we can also communicate well with clients. Consider paying close attention to competitive price per sq ft figures (I know, this may not work in rural markets). If you are coming in lower or higher than the competitive range in the neighborhood, just be sure you know why and can explain why. Also, consider using price per sq ft figures in your final reconciliation. For instance, along with statements about comps, I regularly find myself saying things like: “The final value is also supported by trend graphs as well as competitive price per sq ft figures in the neighborhood.”

Click here to read the other two reasons and the comments.

http://sacramentoappraisalblog.com/2016/02/08/3-ways-price-per-sq-ft-is-valuable-in-real-estate-even-for-appraisers

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Adjustments – what to do or not to do?

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New in the FEBRUARY 2016 issue of the paid Appraisal Today

Adjustments Part 1 – Are you making too many adjustments? Lots of ideas, research, etc.

– Support vs. proof for adjustments by Bob Keith. A very good explanation of Scope Creep on adjustments. He is the former Executive Director 

of the Oregon State Appraisal Board and is a consultant for appraisers with state board complaints

Identifying Residential Architectural Styles by Mark Nadeau,SRA, Book review. Read my review to decide if you want to buy the book.                        

Two good, practical residential books, with very good tips on adjustments  Book reviews. 

The Dictionary of Real Estate Appraisal, 6th Edition – Read my review to decide if you want to buy this book. 

Coming in the March 2016 issue:

– Adjustments Part 2 – what adjustment methods do you want to use. There are well over 20 methods.

– How to use your Web site to get non-lender work. The easiest marketing method, by far!! I get half of my non-lender work from my Web site.

Cancel at any time. For any reason!!

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Subscribers get, FREE: past 18+ months of newsletters plus 4 Special Reports!!

If you are a paid subscriber and did not get the February 2016 issue, emailed Feb. 4, 2016, please send an email to info@appraisaltoday.com  requesting it and we will send it to you!! Or, hit the reply button. Be sure to put in a comment requesting it ;>

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Quicken loan Superbowl Rocket Mortgage ad – Tweet-O-Mania!!

Excerpt:

Social media quickly blew up with comments from people convinced Quicken’s product will usher in a second housing crisis by lending to unqualified borrowers. And then the Consumer Financial Protection Bureau joined in.

The CFPB’s tweet – which was posted shortly after the Rocket Mortgage commercial aired, but doesn’t expressly refer to Quicken Loans or the Super Bowl – implicitly warns consumers to be wary of technology in the mortgage application process.

Given that the CFPB has been aggressively pushing a paperless agenda, the response highlights the cognitive dissonance in the messages it and other regulators send to the mortgage industry about how and when to use technology.

See the ad and some of the tweets here:

http://www.nationalmortgagenews.com/news/voices/quicken-renews-debate-over-how-fast-is-too-fast-to-get-a-mortgage-1071520-1.html

More commentary in this link:

Quicken Loans Super Bowl ad strikes wrong nerve with Twitteratti and journalists Why let the facts get in the way of fun?

http://www.housingwire.com/blogs/1-rewired/post/36230-quicken-loans-super-bowl-ad-strikes-wrong-nerve-with-twitteratti-and-journalists

My comment: I watched the Quicken loans ad. Seemed ok to me. For decades, lots of people have been saying “why does a mortgage loan take weeks or months and I can go to an auto dealership and drive out with an expensive car in an 1-2 hours?”

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Super Bowl 50: A Housing Highlight Reel contrasts between 1966 and 2016 in Charlotte NC and Denver C 

Excerpt:

Census number-crunchers rounded up a collection of facts comparing life back in 1967 to present-day. The play-by-play includes housing stats.

Here are a few stats:

In 1966, The U.S. population was 197.5 million.

The median sales price of a new, single-family home was just $22,700.

In 2016, The U.S. population is 322.8 million-up 63 percent from 1967.The median sales price of a new, single-family home is $282,800.

I shoulda bought something in 1966!! Check it all out and see stats for Charlotte, NC and Denver.

http://blog.rismedia.com/2016/super-bowl-50-a-housing-highlight-reel/ ok

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10 Things to Know About Commercial Real Estate Appraisal

Comments by Douglas McKnight, a 22-year veteran commercial real estate appraiser. Written for small business owners.

Excerpt:

Small business owners have a lot to digest when it comes to the subject of commercial real estate-especially these days. That goes double for the notion of obtaining an appraisal on a piece of commercial real estate, a process that can differ quite a bit from appraisals done for residential properties. “Commercial is very different from residential in the fact that appraisals are much more subjective in nature,” says Scott Everett, founder and president of Supreme Lending, a mortgage lender in Dallas. “Much of the value derived from a commercial building is based on the rental rates received relative to the expenses paid out. The underlying asset is important, but not even close to the same way that a residential properties value assets.”

Don’t miss the comments. Originally published in May, 2011. Not much has changed since then for small commercial properties except that loans are a bit easier to obtain. Dramatically different appraisal requirements from residential AMC Scope Creep mania!!

http://www.inc.com/guides/201105/10-things-about-commercial-real-estate-appraisal.html 

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HOW TO USE THE NUMBERS BELOW. Appraisals are ordered after the loan application. These numbers tell you the future for the next few weeks. For more information on how they are compiled, go to www.mbaa.org 

Note: I publish a graph of this data every month in my printed newsletter, Appraisal Today. For more information or get a FREE sample issue go to www.appraisaltoday.com/products.htm  or send an email to info@appraisaltoday.com . Or call 800-839-0227, MTW 8AM to noon, Pacific time.

Mortgage applications increased 9.3 percent from one week earlier 

WASHINGTON, D.C. (February 10, 2016) – Mortgage applications increased 9.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 5, 2016.

The Market Composite Index, a measure of mortgage loan application volume, increased 9.3 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 12 percent compared with the previous week.  The Refinance Index increased 16 percent from the previous week.  The seasonally adjusted Purchase Index increased 0.2 percent from one week earlier. The unadjusted Purchase Index increased 7 percent compared with the previous week and was 25 percent higher than the same week one year ago 

The refinance share of mortgage activity increased to 61.2 percent of total applications from 59.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.4 percent of total applications 

The FHA share of total applications decreased to 12.3 percent from 12.9 percent the week prior. The VA share of total applications remained unchanged from 11.1 percent the week prior. The USDA share of total applications decreased to 0.6 percent from 0.7 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to its lowest level since April 2015, 3.91 percent, from 3.97 percent, with points unchanged at  0.41 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.  The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to its lowest level since April 2013, 3.76 percent, from 3.84 percent, with points increasing to 0.30 from 0.26 (including the origination fee) for 80 percent LTV loans.  The effective rate decreased from last week 

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to its lowest level since May 2015, 3.72 percent, from 3.80 percent, with points decreasing to 0.33 from 0.35 (including the origination fee) for 80 percent LTV loans.  The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to its lowest level since April 2015, 3.18 percent, from 3.22 percent, with points increasing to 0.38 from 0.37 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week 

The average contract interest rate for 5/1 ARMs decreased to its lowest level since October 2015, 2.96 percent, from 3.00 percent, with points decreasing to 0.30 from 0.34 (including the origination fee) for 80 percent LTV loans.  The effective rate decreased from last week

The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.  Respondents include mortgage bankers, commercial banks and thrifts.  Base period and value for all indexes is March 16, 1990=100.

 

 
To purchase the paid Appraisal Today newsletter  go to

www.appraisaltoday.com/products.htm  or call 800-839-0227. 

 

FHA – Crawl space and attics

Crawl space and attics
Random Internet postings….
Man killed in crawlspace of Oklahoma City home, may have been electrocuted
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Posted on facebook, reportedly from FHA employees:
– If you can fit through the crawlspace door you must crawl the crawl space and inspect it all.
– Must inspect all the attic if there is access, even if there is no flooring.
My comment: If you’re fat, don’t have to inspect all of the crawlspace? Lots of stories about snakes, rats, dead animals, etc etc in crawl spaces. Appraisers crawling along ceiling joists and going thru the ceiling. Hmm… maybe FHA appraising is for the young, agile and small ;>

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FHA new manual 9/15/15 – no changes or USPAP problems?

FHA says no significant changes from previous requirements
My comment: I have heard from knowledgeable appraisers and instructors that there are few changes from the old handbook.
Recent posting by Coleen Morrison on a Facebook group
I heard back from my contact at HUD, and here is what she said: “Ms. Conde [the author of the article] (Ed note: see below) and I have had multiple conversations. FHA has not changed any of its requirements regarding the items that she discusses. If an FHA appraiser was compliant prior to September 14, the appraiser is going to be compliant after. The language has changed a bit, mostly for clarity and format, but the requirements are the same.”
I have written back and asked specifically about their thoughts regarding the Competency Rule. I have been saying the same thing … that nothing has really changed… but I never thought about the Competency Rule. It seems very contradictory when the HUD manual states the appraisal is not to be considered a home inspection;
The handbook states: “FHA appraisals are not a guarantee that the property is free from defects. The appraisal establishes the value of the property for mortgage insurance purposes only. Buyers need to secure their own home inspections through the services of a qualified inspector and satisfy themselves about the condition of the property.”
Adding the statement from the manual into your appraisals, and referencing Assumption and Limiting Condition #5 are 2 steps you can take to help protect yourself. I don’t know how much of a fight we can have against HUD, so if you choose to do FHA appraisals, and you were not doing the extent of inspection which is very clear in the 4001 now, you will need to step it up; add what the HUD manual states above in big bold letters to your report; or choose not to do FHA appraisals. The ultimate choice is yours.
My comment: I quit doing FHA appraisals in 1988, after 2 years on the roster. Too many requirements as compared with conventional. Plus… our local property values had skyrocketed way above the FHA limits… not much work.
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FHA vs USPAP – Appraisers Caught in Catch 22
By Joanne Conde
Excerpts:
The new FHA Handbook will become effective on September 14, 2015. There has been much discussion of the implications of changing “should” to “must” in thousands of examples in the Handbook. As a Board member of the Arizona Association of Real Estate Appraisers as well as being on the FHA Roster, I have taken a good hard look at these requirements and then, it hit me as I was teaching the Uniform Standards of Professional Appraisal Practice (USPAP) which is the basis of appraisal standards for every appraiser in the United States. The FHA assignment conditions, whether under “should” to “must” force appraisers into a Catch 22 or turn down the FHA appraisal assignments. FHA is essentially making it a condition of employment that appraisers violate the Competency Rule. Why did I not see this before? I guess because the two never converged in my mind at the same time and I expect that is what has also happened to other appraisers.
It is an FHA assignment condition that appraisers make the following statement within the report: “The utilities were on and functioning at the time of inspection and the home meets 4150.2 & 4905.1 HUD Requirements,” and “Other intended users[of the report] are HUD/FHA.”
Click here to read more and read appraisers’ comments

Revised FHA Handbook 4000.1 effective 9/14/15. Are you ready for the changes? Get the facts!!

 What you need to know and which FHA documents you need to read!! 
Available in my paid August Appraisal Today August newsletter!!

Many appraisers say they will quit doing FHA appraisals. 
This means less competition for you!!

There is lots of confusion and mis-information about the changes. Some say there is too much required and others say there have not been many changes. What about attic, crawl space, and appliance inspections?

The author, Doug Smith, SRA, interviewed an FHA executive to find out what is really happening.

There are different FHA documents you need to read, not just Handbook 4000.1. It is very confusing, but Doug tells you what information you need and where to get it. He includes:

  • Which guide to use for what, and links to the reference material, including FAQs, Webinars, and SF Housing Appraisal Report and Data Delivery Guide
  • How to keep updated on changes
  • Attic, crawl space, and appliance inspections
  • Energy efficient items contributory value
  • Highest and best use – when all 4 criteria are required
  • FHA – UAD and Fannie guidelines

And lots more information.

Appraisal Today newsletter

FHA appraisal fees going up after 9/14/15?

Another great survey from www.appraisalport.com !!

7-9-15 fha fees poll.png

My comments: Whether or not there will be increased time (and possible liability issues) required is controversial. Some say there are more requirements, others say not much has changed. My favorite response to the poll is “What changes?” ;>

In the May 2015 paid Appraisal Today June newsletter, Doug Smith’s article discussed the changes: “What’s Up with FHA’s New Manual 4000.1? More Scope Creep? The pluses and minuses of the changes in the manual”. One of the hot topics is about inspecting attic and crawl spaces. For more info on the paid newsletter, click the banner ad below.

FHA Single Family Housing Policy
Handbook (HUD Handbook 4000.1
Information Page Link:
http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/handbook_4000-1

New FHA Appraisal Report and Delivery Guide
It goes step-by-step through the URAR and states what is expected in each section
http://portal.hud.gov/hudportal/documents/huddoc?id=SFH_POLI_APPR_RPT_FIN.PDf
Be sure that any FHA classes you take include this new Guide!!

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FHA extends deadline for new Handbook 4000.1 to June 15, 2015

Handbook Implementation Date Extended 90-days to Give Lenders More Time to Operationalize

On April 30, 2015, the Federal Housing Administration (FHA) announced that it has extended the effective date for the policies contained within its new Single Family Housing Policy Handbook (SF Handbook; HUD Handbook 4000.1) from June 15, 2015 to September 14, 2015.

FHA recognizes that there currently are a number of competing initiatives occurring simultaneously in the mortgage industry that may be challenging mortgagee and other industry partner resources. For this reason, FHA is extending the SF Handbook effective date by 90 days with the expectation that this additional time will enable mortgagees and others to be fully compliant with the new effective date.

Link to new handbook 4000.1http://portal.hud.gov/hudportal/documents/huddoc?id=40001HSGH.pdf

The bulk of the appraisal section starts on pdf page 441 and runs through pdf page 507.

My comment: We love to procrastinate ;> For appraisers, this means there will be opportunities for webinars and seminars. Also, written explanations. The June issue of the paid Appraisal Today newsletter will have an article on the changes written by Doug Smith, SRA, Montana appraiser. Doug has been writing for the paid newsletter for many years. To subscribe, click on the ad below.

Yes, you can start using the new criteria now. Some people like to get ready ahead of time ;>

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New FHA 4000.1 handbook – effective 6/15/15

New FHA 4000.1 handbook tidbits –

Publish Date: 03/18/2015 | Effective Date: 06/15/2015

The bulk of the appraisal section starts on pdf page 441 and runs through pdf page 507.

Here are a few tidbits posted online from appraisers who spent the weekend reading it ;>

– The Appraiser must obtain all of the following from the Mortgagee before beginning an appraisal: Any other legal documents contained in the loan file…

– Page 454 on Photos. Front and angle shots of the comps. Hallways on 2-4 units

– Handbook replaces all previous documents, including most Mortgagee Letters.

– Page 447 ii, methamphetamine (meth) contamination

– Page 441: The Appraiser must treat room additions and garage conversions as part of the GLA of the dwelling, provided that the addition or conversion space: …

– Provide 3 year prior sales history for the comps

Will this mean increased time for FHA appraisals? Depends on how much you are doing now. Remember the old VC sheets? They were a hassle!!

My comment: It is not effective until 6/15/15. There will be some webinars, online articles, etc. before that date. I will let you know.

Link to new handbook 4000.1

http://portal.hud.gov/hudportal/documents/huddoc?id=40001HSGH.pdf

For more details from FHA, see last week’s Appraisal Today email newsletter, in the archives, at:

http://archive.constantcontact.com/fs124/1101648677253/archive/1120449851537.html

For more details from FHA, see last week’s Appraisal Today email newsletter, in the archives, at:

http://archive.constantcontact.com/fs124/1101648677253/archive/1120449851537.html  

Appraisal Today newsletter

FHA to require valuing green improvements?

Another great commentary from Dave Towne, the appraiser who keeps up on what is happening!! His comments are below this summary of a letter sent by the Appraisal Institute.

Excerpts from AI comments, contained in their Letter about the proposed letter:

Appraisal Institute Lauds FHA for Green Valuation Proposal
The Appraisal Institute and the American Society of Farm Managers and Rural Appraisers on Sept. 2 lauded the Federal Housing Administration’s proposal to allow appraisers to utilize residual techniques – such as cost and income approaches – to analyze market reaction to green and energy-efficiency improvements in the absence of comparable sales.

Under the draft handbook, appraisers would be required to analyze and report the local market acceptance of special energy-related building components and equipment, including solar energy components, high-energy efficiency housing features and components such as geothermal systems and wind powered components. The draft explains that in the absence of sufficient data to perform a paired sales analysis, the appraiser must consider the cost or income approach to calculate an appropriate adjustment.

AI article
http://www.myappraisalinstitute.org/ano/DisplayArticle/PastIssue/Default.aspx?volume=15&numbr=17/18&id=22399

Direct link to original FHA document:
http://portal.hud.gov/hudportal/documents/huddoc?id=SFH_POLI_APPR_PROP.pdf  See page 68. Dated August 27, 2014.

NOTE: this is proposed, not final. If you read the full document, I could not tell what is existing and what is proposed. The comment period has closed.

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Dave Towne’s email comments, sent to those who subscribe to his emails.

On the surface, this appears to be fair … primarily for the property owner/borrower who has applied for a FHA mortgage loan guarantee.

This appraiser agrees that appraisers who do these kind of assignments must have the appropriate competency, training and experience.  Appraisers are going to have to take specialized ‘green home’ appraising CE courses as one aspect of increasing their knowledge.

But the back end unintended consequence of this proposal is how much in additional fee will the appraiser be allowed to charge for providing an ‘approach’ documentation that is Not Required to be completed by USPAP?  The ‘requirement’ to include a CA or IA becomes an additional assignment condition, added to an already more complicated FHA Scope of Work for FHA assignments.

Secondly, these ‘approaches’ rely on accurate documentation for various component costs and analysis of the income stream resulting from the use of various ‘energy efficient attachments’ to the dwelling … something the average home owner/purchaser/borrower may not have access to or knowledge of.  Yet this proposed REQUIREMENT places the appraiser squarely in the middle of the bulls eye.

Third, adding this level of detail extends the time requirement for report completion.  For these kinds of assignments, a cheap fee and the desire of a “48 hour turn time” after inspection probably won’t be realistic.  Everybody connected to this kind of assignment is going to have to realize that the appraiser will need to be properly compensated and is going to need many more hours or days between assignment acceptance and report submittal … and they are just going to have to live with that reality.  (Appraisers are also going to have to learn to say ‘NO’ and negotiate fees and DD’s when it is appropriate.)

If this just becomes another layer-upon-layer of Scope Creep with no ability to recoup time spent with an appropriate additional fee for the REQUIRED added reporting documentation, then FHA may find itself hurting for appraisers willing to commit to this kind of assignment.  (Re-read the sentence above.)

Dave Towne, AGA, MAA
towneappraisals@clearwire.net
www.towneappraisals.com

My comments: I have never seen any adjustment indicated in my market for energy saving residential improvements except maybe once for a new infill completely “green” home. Of course, I live in the “mild climate” San Francisco Bay Area ;> This has been going on for a long time, without requiring dollar adjustments. The old Fannie Mae URARs had grid adjustment lines for energy efficient improvements.

 

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